Pepsi retailers upset over Amazon deal

Could Pepsi team up with traditional retailers - like Wal-Mart - who also offer their own MP3 download services in the future?

Pepsi’s promotional deal with Amazon’s digital music store has come under fire from some traditional bricks-and-mortar retailers who not only sell vast amounts of Pepsi, but who also offer their own digital download services.

The Financial Times reports how US retail giant Wal-Mart – which accounts for approximately 18 per cent of all Pepsi sales in North America – also offers its own MP3 download service.

Critics of the deal note that while Pepsi's traditional retailer partners like Wal-Mart and Target both sell vast quantities of Pepsi, Amazon doesn’t sell a single bottle of fizzy pop.

“You have to ask yourself why Pepsi would team up with a company that doesn’t sell its products, and risk antagonising all the people that do,” an unnamed source at one of the US retail giants is quoted as saying.

As a result of the tension, Pepsi products involved in the promotion have reportedly scaled down the visibility of the Amazon logo so as not to antagonise those major retailers already operating their own MP3 download service. This is in stark contrast to Pepsi’s iTunes promotion, in which iTunes branding figured prominently.

Jeff Smith, retail consultant at Accenture, sums things up nicely when he says: “The thing they [Pepsi] didn’t think about is that anyone selling Pepsi in the general merchandise or electronics business is going to feel that they were promoting a competitor.”